Marginal pricing sets most market prices in the world these days. That is, the last buy sets the price. This is what happens big time in crypto markets, exchanges rates and the stock market. Something is only worth what the last person or 'bot' pays for it.
If bad news or fear comes into the market. Or the asset or commodity is in a downtrend then the value can just disappear. Crypto experiences this phenomena.
However, crypto also has pump and dump activity. In that moment of the pump everyone FOMOs (Fear Of Missing Out) in and the price can go up a few hundred percent.
If you are the last buyer. Thats a terrible place to be. You set the price for the whole market. But as soon as other market players don't back it up or bad news comes in, then it falls or even tumbles! Ouch! Marginal pricing can bite.
So what gives value. Speculation. Future income expectations. Or safe asset. Maybe just being early to something. Some sort of belief comes into play supporting a choice to be the marginal price setter.
Somethings have value like commodities and assets in demand that produce an income. While other things may be pyramid schemes or scams.
Is a computer worth $10, $500 or $2000? Well marginal pricing is one way to let us know what people value it. At least as one point in time.
Of course, there are other ways to price things. Fixed prices, auctions, discounting, rewards, offsets etc. And the supply side of the equation comes in too.
At the end of the day you, somebody or the government is saying what value is.
Final thoughts...
Toilet paper?! Why a run on Toilet paper during the COVID pandemic. Value? Price?
Thanks for reading. StarLord
It is an essential commodity needed by each household, with Covid-19 outbreak and lockdown more of it is in demand. The rush could be attributed to increase in price or artificial scarcity. The same game is being played in the cryptomarket due to the hype regarding BTC halving.